strategy+business is published by PwC Strategy& Inc.
or, sign in with:
strategy and business
Published: November 22, 2011
 / Winter 2011 / Issue 65


A Better Way to Battle Malware

The quality transition did not happen overnight, however. The first evolutionary stage occurred with the introduction of statistical process control and the accompanying shift from inspection to prevention. Although initially ignored in the United States, W. Edwards Deming, a statistician who became a noted management guru, introduced his philosophy in Japan during the military-led nation building after World War II. Managers from leading companies such as Toyota, Canon, and Sony eagerly applied the new tools to control quality at the source — and in the process transformed the image of Japan from a producer of cheap knockoffs in the 1960s to the gold standard of manufacturing prowess and product quality by the mid-1980s.

The shift to prevention also led to a focus on root-cause analysis and problem solving. Statistical quality control charts separated normal, random variation from “special cause” variation. But that was just the starting point. Knowing that a spike in a chart isn’t random doesn’t tell you what caused the spike. Engineers and quality specialists needed tools to determine the root cause of problems in order to fix them.

Two engineers-turned-consultants, Genichi Taguchi and Dorian Shainin, proved instrumental in translating the statistical concepts into practical tools during the 1950s and ’60s. Employed at Nippon Telegraph and Telephone during the period when Japanese companies were aggressively adopting Deming’s philosophy, Taguchi developed a methodology for finding root causes. The Taguchi method built upon classic experimental design methods developed by R.A. Fisher before World War I, but offered a more user-friendly package. Although some questioned the rigor of Taguchi’s methods, he was able to make accessible the testing of multivariate hypotheses, which armed a host of engineers with a practical problem-solving technique.

Shainin pushed practicality even further by famously exclaiming, “Talk to the parts; they are smarter than the engineers.” Rather than hypothesize potential causes and then design an experiment to test them, Shainin encouraged hands-on problem solving. He employed a method of paired swaps between a faulty and functional product to identify the “red X,” the one part most likely to be causing the problem. He appreciated that statistical methods could tease out subtle relationships and interaction effects, but his pragmatic problem solving focused on identifying and fixing the biggest issues rapidly.

Philip Crosby helped ignite the modern quality movement by framing the problem in managerial terms with his 1979 book, Quality Is Free: The Art of Making Quality Certain (McGraw-Hill). Crosby challenged senior managers to quantify the true cost of quality, using a framework developed by Armand Feigenbaum that deconstructed both the cost of ensuring good quality and the cost of poor quality into four categories: prevention, appraisal, internal failure, and external failure. Crosby asserted that the total cost of these four categories could easily add up to more then 30 percent of a company’s revenues, but most senior managers missed this problem, focusing instead on balancing the money spent on appraisal versus the cost of external failure. Thus, by Crosby’s calculations, better quality was “free” because investments in prevention could be funded by reducing the vast amount of money spent reworking internal failures and fixing or replacing defective products. Although Crosby did not push the science of quality forward, he accelerated the application by articulating the dynamics in bottom-line terms, thus elevating the issue into the executive suite.

However, initial efforts toward a quality revolution in Western economies struggled to take hold during the 1980s. Many companies misattributed Japan’s success to the use of quality circles, where small groups of frontline employees worked to drive continuous improvement through incremental change. Western managers falsely assumed they could simply create teams and empower employees to reduce quality errors. However, without the proper support, these early efforts evolved into sloganeering with posters admonishing employees to “Do it right the first time!” while management washed its hands of responsibility.

Follow Us 
Facebook Twitter LinkedIn Google Plus YouTube RSS strategy+business Digital and Mobile products App Store